Annual Financial Report

Transcription

1 Annual Financial Report Fiscal Year 2016 September 1, 2015 August 31, 2016

2 Lamar University engages and empowers students with the skills and knowledge to thrive in their personal lives and chosen fields of endeavor. As a doctoral granting institution, Lamar University is internationally recognized for its high quality academics, innovative curriculum, diverse student population, accessibility, and leading edge scholarly activities dedicated to transforming the communities of Southeast Texas and beyond.

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4 LAMAR UNIVERSITY TABLE OF CONTENTS Page Letter of Transmittal... Management Discussion and Analysis (Combined Only)... Organizational Data... Enrollment Data... i ii Proprietary Fund Financial Statements (Primary Statements) Statement of Net Assets... 1 Statement of Revenues, Expenses, and Changes in Net Assets... 5 Matrix of Operating Expenses Reported by Function... 7 Statement of Cash Flows... 8 Notes to the Financial Statements Supplemental Supporting Information Schedules: 1A Schedule of Expenditures of Federal Awards B Schedule of State Grant Pass-Throughs To/From State Agencies E Defeased Bonds Outstanding Reconciliation of Cash in State Treasury Higher Education Assistance Fund General Revenue Reconciliation... 40

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6 Lamar University A Member of The Texas State University System ORGANIZATIONAL DATA AS OF AUGUST 31, 2016 The Texas State University System Dr. Jaime R. Garza BOARD OF REGENTS OFFICERS Chairman Rossanna Salazar Vice Chairman MEMBERS Term Expires Hometown Charlie Amato 2/1/2019 San Antonio Dr. Jaime R. Garza 2/1/2017 San Antonio Veronica Muzquiz Edwards 2/1/2021 San Antonio David Montagne 2/1/2021 Beaumont Vernon Reaser III 2/1/2019 Bellaire Rossanna Salazar 2/1/2017 Austin William F. Scott 2/1/2019 Nederland Alan L. Tinsley 2/1/2021 Madisonville Donna N. Williams 2/1/2017 Arlington Dylan J. McFarland 5/31/2017 Huntsville ADMINISTRATIVE OFFICERS SYSTEM OFFICE Dr. Brian McCall Dr. John Hayek Dr. Fernando C. Gomez Dr. Roland Smith Daniel Harper Chancellor Vice Chancellor for Academic Affairs Vice Chancellor and General Counsel Vice Chancellor for Finance Deputy Vice Chancellor for Finance Sean Cunningham Vice Chancellor for Governmental Relations Peter E. Graves Mike Wintemute Carole M. Fox Vice Chancellor for Contract Administration Deputy Vice Chancellor for Marketing & Communications Director of Audits and Analysis Lamar University ADMINISTRATIVE OFFICERS Dr. Kenneth Evans Dr. James Marquart Mr. E. Craig Ness Dr. Vicki McNeil Dr. John Bello-Ogunu Juan Zabala Priscilla Parsons Jason Henderson President Provost and Vice President for Academic Affairs Vice President for Finance and Operations Vice President for Student Engagement Vice President for Diversity and Inclusion Vice President for University Advancement Vice President for Information Technology Athletic Director i

7 Lamar University Texas State University System Student Enrollment Data For the Year Ended August 31, 2016 NUMBER OF STUDENTS BY SEMESTER SUMMER TERM 2016 TYPE OF STUDENT FALL 2015 SPRING 2016 FIRST SECOND Texas Residents 12,205 11,388 3,586 3,478 Out of State (Classified as Residents) Out of State Foreign Children of Disabled Firemen or Peace Officers Children of Deceased Public Servants Children of Professional Nurses Peace Officer Concurrent Enrollment Foster Children of the State Good Neighbor High School Honor Scholarships High Ranking Senior 9 9 Hazelwood Act Senior Citizens 3 4 Commission for the Blind/Deaf Fireman Exempt Thesis Only Nursing Faculty/Staff 1 1 Teaching Assistants 1 3 Competitive Scholarships Military Personnel and Dependents Louisiana Adjacent County Mexico Pilot National Student Exchange Program Reciprocal Exchange International New Mexico Adjacent County Texas Tomorrow Waiver Adopted Students Pase Distance Learning Family & Consumer Science Alliance Agreement Clinical Preceptor Exempt Beaumont-Louisiana Non-resident Economic Development 1 Multi Texas University TDCJ Education Code Trio Grant Math 0301 HB 1406 Non US Citizen Totals 14,494 13,511 4,272 4,103 * Enrollment Data (Fall Semester ) SEMESTER STUDENTS HOURS Fiscal Year , , , , , , , , , ,766 ii

8 Proprietary Fund Financial Statements Lamar University Visionary Initiatives Proprietary Fund Financial Statements After soliciting and reviewing nearly 50 proposals from faculty and staff, five visionary projects were selected campus-wide that build on existing, distinctive strengths within LU, can secure additional future resources and foster collaboration across disciplines. Each of the initiatives are highlighted in this Annual Financial Report for Lamar University The Center for History and Culture of Southeast Texas and the Upper Gulf Coast 2. The Center for Digital Learning 3. Interdisciplinary Freshman Experience 4. The Center for Applications of Digital Technologies in Health and Disability 5. The Flare and Abnormal Situation Management Research for Petroleum and Chemical Process Industries

9 Proprietary Fund Financial Statements The Center for History and Culture of Southeast Texas and the Upper Gulf Coast CHC will promote the creation, preservation and transmission of knowledge of Southeast Texas, particularly the role of energy and its impact on the area. It will also serve to attract visitors from across the nation, being located less than two miles from the original Spindletop Lucas gusher. The interdisciplinary, multicultural center will promote public engagement through publications, exhibits and cultural performances, sponsorship of lectures and symposia, innovative curriculum, and support of faculty and students in their research. The CHC offers LU the opportunity to establish a regional identity. Proprietary Fund Financial Statements

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11 Texas State University System Lamar University Statement of Net Assets August 31, 2016 Total ASSETS Current Assets: Cash and Cash Equivalents (Note 3) Cash on Hand 18, Cash in Bank 22,685, Cash in Transit/Reimburse from Treasury Cash in State Treasury (Schedule 3) 6,204, (schedule 3) Cash Equivalents 14,488, Securities Lending Collateral Short Term Investments (Note 3) Restricted: Cash and Cash Equivalents (Note 3) Cash on Hand Cash in Bank 5,426, Cash in Transit/Reimburse from Treasury Cash in State Treasury (schedule 3) Cash Equivalents Short Term Investments (Note 3) Legislative Appropriations 1,284, Receivables: Federal 2,174, Other Intergovernmental Interest and Dividends Accounts Receivable 30,934, Gifts, Pledges and Donations 1,100, Investment Trades Other Interfund Receivable (Note 12) 9,701, Due From Other Agencies (Note 12) 1,939, Consumable Inventories Merchandise Inventories 163, Prepaid Items 4,444, Loans and Contracts 4,841, Other Current Assets Total Current Assets 105,408,

12 Texas State University System Lamar University Statement of Net Assets August 31, 2016 Total Non-Current Assets: Restricted: Cash and Cash Equivalents (Note 3) Cash on Hand Cash in Bank 9,251, Cash in Transit/Reimburse from Treasury Cash in State Treasury Cash Equivalents 9,098, Short Term Investments (Note3) Receivables 2, Investments (Note 3) 50,415, Loans and Contracts Other Assets Loans and Contracts Investments (Note 3) Interfund Receivables (Note 12) Gifts, Pledges and Donations Capital Assets: (Note 2) Non-Depreciable or Non-Amortizable Land and Land Improvements 11,583, Infrastructure Construction in Progress 28,682, Other Capital Assets 2,304, Depreciable or Non-Amortizable Buildings and Building Improvements 251,680, Less Accumulated Depreciation -130,246, Infrastructure 17,106, Less Accumulated Depreciation -12,703, Facilities and Other Improvements 23,352, Less Accumulated Depreciation -12,602, Furniture and Equipment 24,698, Less Accumulated Depreciation -18,547, Vehicles, Boats, and Aircraft 1,666, Less Accumulated Depreciation -1,174, Other Capital Assets 22,809, Less Accumulated Depreciation -20,558, Amortizable Assets-Intangible Less Accumulated Amortization Assets Held in Trust Other Non-Current Assets Total Non-Current Assets 256,816, Total Assets 362,224,

13 Texas State University System Lamar University Statement of Net Assets August 31, 2016 Total DEFERRED OUTFLOWS OF RESOURCES Derivative Hedging Instrument Assets Deferred Outflow of Resources Total Deferred Outflows of Resources 0.00 LIABILITIES Current Liabilities: Payables from: Accounts 3,553, Investment Trades Payroll 10,156, Other Intergovernmental Federal Interest Other Interfund Payable (Note 12) 9,701, Due to Other Agencies (Note 12) 7,511, Unearned Revenues 49,901, Short Term Debt Notes and Loans Payable (Note 5) Revenue Bonds Payable (Note 5, 6) General Obligation Bonds Payable (Note 5, 6) Claims and Judgments (Note 5) Employees' Compensable Leave (Note 5) 506, Capital Lease Obligations (Note 5, 8) Contract Retainage Payable Liabilities Payable from Restricted Assets Obligations/Reverse Repurchase Agreements Obligations Under Securities Lending Funds Held for Others 333, Other Current Liabilities 154, Total Current Liabilities 81,819, Non-Current Liabilities: Interfund Payable (Note12) Notes and Loans Payable (Note 5) Revenue Bonds Payable (Note 5, 6) General Obligation Bonds Payable (Note 5, 6) Claims and Judgments (Note 5) Liabilities Payable from Restricted Assets Employees' Compensable Leave (Note 5) 2,871, Capital Lease Obligations (Note 5, 8) Assets Held for Others Pollution Remediation Obligations Other Non-Current Liabilities 311, Total Non-Current Liabilities 3,183, Total Liabilities 85,002,

14 Texas State University System Lamar University Statement of Net Assets August 31, 2016 Total DEFERRED INFLOWS OF RESOURCES Derivative Instrument Liabilities Deferred Inflow of Resources Total Deferred Inflows of Resources 0.00 NET POSITION Invested in Capital Assets, Net of Related Debt 188,049, Restricted For Education Debt Service Capital Projects 9,324, Funds Held As Permanent Investments: Non-Expendable 18,697, Expendable 3,130, Other 9,705, Unrestricted 48,314, Total Net Position 277,222,

15 Texas State University System Lamar University Statement of Revenues, Expenses, and Changes in Net Assets For the Fiscal Year Ended August 31, 2016 Total OPERATING REVENUES Sales of Goods and Services Tuition and Fees - Pledged 136,140, Discounts and Allowances -24,905, Professional Fees-Non-pledged Professional Fees - Pledged Discounts and Allowances Auxiliary Enterprises-Non-pledged Auxiliary Enterprises - Pledged 24,152, Discounts and Allowances Other Sales of Goods and Services-Non-Pledged Other Sales of Goods and Services - Pledged 457, Discounts and Allowances Interest and Investment Income Non-pledged 187, Interest and Investment Income Pledged Net Increase (Decrease) Fair Market Value -Non-pledged 19, Net Increase (Decrease) Fair Market Value -Pledged Federal Revenue-Operating 2,362, Federal Pass-Through Revenue 2,694, State Grant Revenue 19, State Grant Pass-Through Revenue 5,635, Other Grants and Contracts -Non-pledged 1,156, Other Grants and Contracts-Pledged Contributions to Retirement System Other Operating Revenues - Non-pledged Other Operating Revenues - Pledged 1,924, Total Operating Revenues 149,845, OPERATING EXPENSES Instruction 62,874, Research 2,787, Public Service 1,705, Academic Support 33,346, Student Services 8,665, Institutional Support 24,414, Operation and Maintenance of Plant 12,832, Scholarship and Fellowships 28,042, Auxiliary Enterprise Expenditures 30,137, Depreciation and Amortization 8,541, Total Operating Expenses 213,346, Operating Income (Loss) -63,501, NONOPERATING REVENUES (EXPENSES): Legislative Revenue 48,617, Additional Appropriations 13,925, Federal Revenue 16,526, Federal Pass-Through Revenue State Grant Pass-Through Revenue Gifts-Non-Pledged 6,931,

16 Texas State University System Lamar University Statement of Revenues, Expenses, and Changes in Net Assets For the Fiscal Year Ended August 31, 2016 Total Gifts - Pledged Land Income Interest and Investment Income (Expense) -Non-Pledged 791, Interest and Investment Income (Expense) - Pledged 44, Loan Premium/Fees Securities Lending Investing Activities Expenses Interest Expenses and Fiscal Charges Borrower Rebates and Agent Fees Gain (Loss) on Sale of Capital Assets -450, Net Increase (Decrease) in Fair Value of Investments-Non-pledged 171, Net Increase (Decrease) in Fair Value of Investments - Pledged Settlement of Claims Other Nonoperating Revenues (Expenses) Non-pledged Other Nonoperating Revenue (Expenses)-Pledged -324, Total Nonoperating Revenues (Expenses) 86,232, Income (Loss) before Other Revenues, Expenses, Gains/Losses and Transfers 22,731, OTHER REVENUES, EXPENSES, GAINS/LOSSES AND TRANSFERS Capital Contributions Capital Appropriations (HEAF) 9,401, Federal Grant - Capital Grant Contributions Contributions to Permanent and Term Endowments Special Items Extraordinary Items Increase NA Interagency Transfer Capital Assets (Note 12) Decrease NA Interagency Transfer Capital Assets (Note 12) Transfer In (Note 12) 194, Transfer Out (Note 12) -11,263, Legislative Transfer In (Note 12) 256, Legislative Transfer Out (Note 12) -2,457, Lapses Total Other Revenues, Expenses, Gains/Losses and Transfers -3,867, Change in Net Position 18,863, Net Position, September 1, ,353, Restatements (Note 14) 5, Net Position. September 1, 2015, as Restated 258,358, NET POSITION, August 31, ,222,

17 Texas State University System Lamar University Matrix of Operating Expenses Reported by Function For the Fiscal Year Ended August 31, 2016 ng Expenses Instruction Research Hospitals and Clinics Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarship and Fellowships Auxiliary Enterprises Depreciation and Amortization* Total Expenses Goods Sold 0.00 and Wages 48,461, ,572, , ,061, ,650, ,420, ,072, ,204, ,199, Related Costs 10,892, , , ,392, ,768, ,034, ,163, ,881, ,459, onal Fees and Services 370, , ,415, , ,528, , ,100, ,683, Grant Pass-Through Expense 0.00 rant Pass-Through Expense 302, , , , , , , , , ,678, ,984, s and Supplies 1,073, , , ,794, , ,943, ,083, ,141, ,726, nications and Utilities 27, , , , , ,694, ,017, ,197, and Maintenance 91, , , , , , ,008, ,028, ,015, and Leases 78, , , , , , , , , and Reproduction 51, , , , , , , , , ation and Amortization* 8,541, ,541, bt Expense ships 28,042, ,325, ,367, and Judgments 0.00 perating Expenses 1,112, , , ,355, , ,077, , ,391, ,937, perating Expenses 62,874, ,787, ,705, ,346, ,665, ,414, ,832, ,042, ,137, ,541, ,346, ciation and Amortization may be allocated to the various functions or shown entirely in the Depreciation and Amortization column 7

18 Texas State University System Lamar University Statement of Cash Flows For the Fiscal Year Ended August 31, 2016 CASH FLOWS FROM OPERATING ACTIVITES Total Receipts from Customers 457, Proceeds from Tuition and Fees 114,826, Proceeds from Research Grants and Contracts 11,536, Proceeds from Gifts Proceeds from Loan Programs Proceeds from Auxiliaries 24,152, Proceeds from Other Operating Revenues 2,130, Payments to Suppliers for Goods and Services -49,884, Payments to Employees for Salaries -78,664, Payments to Employees for Benefits -22,459, Payments for Loans Provided Payments for Other Operating Expenses -48,446, Net Cash Provided by Operating Activities -46,351, CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITES Proceeds from Debt Issuance Proceeds from State Appropriations 71,944, Proceeds from Gifts 6,931, Proceeds from Endowments Proceeds of Transfers from Other Funds Proceeds from Grant Receipts 16,526, Proceeds from Advances from Other Funds Proceeds from Loan Programs Proceeds from Other Noncapital Financing Activities 451, Proceeds from Contributed Capital Payments of Principal on Debt Issuance Payments of Interest Payments of Other Costs of Debt Issuance Payments for Transfers to Other Funds Payments for Grant Disbursements Payments for Advances to Other Funds Payments for Other Noncapital Financing Uses -6,947, Net Cash Provided by Noncapital Financing Activities 88,906, CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITES Proceeds from the Sale of Capital Assets -450, Proceeds from Debt Issuance Proceeds from State Grants and Contracts Proceeds from Federal Grants and Contracts Proceeds from Gifts Proceeds from Other Capital and Related Financing Activities Proceeds from Capital Contributions Proceeds from Advances from Other Funds Payments for Additions to Capital Assets -18,046, Payments of Principal on Debt -6,793, Payments for Capital Leases -917, Payments of Interest on Debt Issuance -4,538, Payments for interfund receivables Payments of Other Costs of Debt Issuance Net Cash Provided by Capital and Related Financing Activities -30,745, CASH FLOWS FROM INVESTING ACTIVITES Proceeds from Sales of Investments Proceeds from Interest Income 836, Proceeds from Investment Income Proceeds from Principal Payments on Loans 8

19 Texas State University System Lamar University Statement of Cash Flows For the Fiscal Year Ended August 31, 2016 Total Payments to Acquire Investments -40,657, Payments for Nonprogram Loans Provided Net Cash Provided by Investing Activities -39,820, Net Increase (Decrease) in Cash and Cash Equivalents -28,012, Cash and Cash Equivalents, September 1, ,185, Changes in Accounting Principle Changes in Reporting Entity Restatements to Beginning Cash and Cash Equivalents Cash and Cash Equivalents, September 1, Restated 95,185, Cash and Cash Equivalents, August 31, ,173, RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating Income (Loss) -63,501, Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities: Amortization and Depreciation 8,541, Bad Debt Expense Operating Income (Loss) and Cash Flow Categories: Classification Differences Changes in Assets and Liabilities: (Increase) Decrease in Receivables 2,601, (Increase) Decrease in Due from Other Funds 0.00 (Increase) Decrease in Inventories 3, (Increase) Decrease in Prepaid Expenses 594, (Increase) Decrease in Notes Receivable -537, (Increase) Decrease in Loans & Contracts 0.00 (Increase) Decrease in Other Assets 0.00 (Increase) Decrease in State Appropriations 0.00 Increase (Decrease) in Payables 4,637, Increase (Decrease) in Deposits 0.00 Increase (Decrease) in Due to Other Funds 0.00 Increase (Decrease) in Unearned Revenue 1,196, Increase (Decrease) in Compensated Absence Liability 112, Increase (Decrease) in Benefits Payable Increase (Decrease) in Other Liabilities Total Adjustments 17,149, Net Cash Provided by Operating Activities -46,351, Non Cash Transactions Donation of Capital Assets 90, Net Change in Fair Value of Investments 171, Borrowing Under Capital Lease Purchase Other 9

20 Notes to the Basic Financial Statements Notes to the Basic Financial Statements The Center for Digital Learning This initiative will provide necessary management and administrative skills to implement and maintain an effective digital learning environment. Participants in the CDL will perform research studies, write and public research papers, collaborate with technology companies, and provide professional development.

21 Notes to the Basic Financial Statements Interdisciplinary Freshman Experience The Interdisciplinary Freshman Experience bring together students of diverse backgrounds and interests from disciplines that do not typically interact in the undergraduate curriculum to work as groups toward a common goal. Their teamwork will help them develop crucial professional skills such as problem solving, time management, innovation and interpersonal communication. Through this experience, students will be better prepared for real-world problem solving as they learn that most tasks in industry and society are interdisciplinary in nature. Additionally, this program will teach students to value diversity. Notes to the Basic Financial Statements

22 LAMAR UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS August 31, 2016 NOTE 1: Summary of Significant Accounting Policies Entity Lamar University is considered an Institution of Higher Education of the State of Texas, and its financial records comply with state statutes and regulations. This includes compliance with the Texas Comptroller of Public Accounts Reporting Requirements for Annual Financial Reports of State Agencies and Universities. Due to the statewide requirements embedded in Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Government, the Comptroller of Public Accounts does not require the accompanying annual financial report to comply with all the requirements in this statement. The financial report is considered for audit by the state auditor as part of the audit of the State of Texas Comprehensive Annual Financial Report (CAFR); therefore, an opinion has not been expressed on the financial statements and related information contained in this report. Fund Structure The accompanying financial statements are presented on the basis of funds. A fund is considered a separate accounting entity. The fund designation for institutions of higher education is a Business Type Activity within the Proprietary Fund Type. Proprietary Funds Business Type Activity Business type funds are used for activities that are financed through the charging of fees and sales for goods or services to the ultimate user. Institutions of higher education are required to report their financial activities as business type; because, the predominance of their funding comes through charges to students, sales of goods and services and grant revenues. 10

23 Component Units The fund types of the individual discrete component units are available from the component units' separately issued financial statements. Additional information about component units can be found in Note 19. Basis of Accounting The basis of accounting determines when revenues and expenditures or expenses are recognized in the accounts reported in the financial statements. The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Business activity type funds (proprietary funds) are accounted for using the full accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recognized at the time liabilities are incurred. Proprietary funds distinguish operating from non-operating items. Operating revenues and expenses result from providing services or producing and delivering goods in connection with the proprietary funds principal ongoing operations. Operating expenses for the proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. Budget and Budgetary Accounting The budget is prepared biennially and represents appropriations authorized by the Legislature and approved by the Governor (the General Appropriations Act). Unencumbered appropriations are generally subject to lapse 60 days after the end of the fiscal year for which they were appropriated. Assets, Liabilities, and Fund Balances/Net Position ASSETS Cash and Cash Equivalents Short-term highly liquid investments with an original maturity of three months or less are considered cash equivalents. Securities Lending Collateral Investments are generally stated at fair value with certain exceptions in accordance with GASB Statement No. 72 Fair Value Measurement and Application. Invested security lending collaterals are measured at fair value. 11

24 Securities lent are reported as assets on the balance sheet. The costs of securities lending transactions are reported as expenditures or expenses in the operating statement. These costs are reported at gross. Restricted Assets Restricted assets include monies or other resources restricted by legal or contractual requirements. These assets include proceeds of enterprise fund general obligation and revenue bonds and revenues set aside for statutory or contractual requirements. Assets held in reserve for guaranteed student loan defaults are also included. Inventories and Prepaid Items Inventories include both merchandise inventories on hand for sale and consumable inventories. Inventories are valued at cost, generally utilizing the last-in, first-out method. The consumption method of accounting is used to account for inventories and prepaid items that appear in the proprietary fund types. The cost of these items is expensed when the items are used or consumed. Capital Assets Assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year should be capitalized. These assets are capitalized at cost or, if not purchased, at appraised fair value as of the date of acquisition. Depreciation is reported on all exhaustible assets. Inexhaustible assets such as works of art and historical treasures are not depreciated. Road and highway infrastructure is depreciated over the estimate of average useful live of a grouping of assets using composite method. Other depreciable assets are depreciated over the estimated useful life of the asset using the straight-line method. All capital assets acquired by proprietary funds or trust funds are reported at cost or estimated historical cost if actual historical is not available. Donated capital assets are reported at acquisition value. Depreciation is charged to operations over the estimated useful life of each asset using the straight-line method. Other Receivables Current and Noncurrent The disaggregation of other receivables as reported in the financial statements is shown in Note 24, Disaggregation of Receivables and Payables Balances. Other receivables include year-end accruals not included in any other receivable category. This account can appear in governmental and proprietary fund types. 12

25 LIABILITIES Accounts Payable Accounts Payable represents the liability for the value of assets or services received at the balance sheet date for which payment is pending. Other Payables Current and Noncurrent Other payables are the accrual at year-end of expenditure transactions not included in any of the other payable descriptions. The disaggregation of other payables as reported in the financial statements is shown in Note 24, Disaggregation of Receivables and Payables Balances. Employees Compensable Leave Balances Employees Compensable Leave Balances represent the liability that becomes due upon the occurrence of relevant events such as resignations, retirements, and uses of leave balances by covered employees. Liabilities are reported separately as either current or noncurrent in the statement of net position. These obligations are normally paid from the same funding source from which each employee s salary or wage compensation was paid. Capital Lease Obligations Capital lease obligations represent the liability for future lease payments under capital lease contracts contingent upon the appropriation of funding by the Legislature. Liabilities are reported separately as either current or noncurrent in the statement of net position. Bonds Payable-General Obligation Bonds General obligation bonds are accounted for in the long-term liabilities adjustment column for governmental activities and in proprietary funds for business-type activities. These payables are reported as long-term liabilities (current for amounts due within one year) and long-term liabilities (noncurrent for amounts due thereafter in the statement of net position/balance sheet). The bonds are reported at par, net of unamortized premiums, discounts, issuance costs and gains/(losses) on bond refunding activities. For governmental activities, bond proceeds are accounted for (when received) as an other financing source in the governmental fund receiving the proceeds. Payment of principal and interest is an expenditure recorded in the debt service fund. All bond transactions and balances for business-type activities are reported in proprietary funds. 13

26 Bonds Payable-Revenue Bonds Revenue bonds are accounted for in proprietary funds for business-type activities and in the long-term liabilities adjustment column for governmental activities. These payables are reported as long-term liabilities (current for amounts due within one year) and long-term liabilities (noncurrent for amounts due thereafter) in the statement of net position/balance sheet. The bonds payable are reported at par, net of unamortized premiums, discounts, issuance costs and gains/(losses) on bond refunding activities. For governmental activities, bond proceeds are accounted for when received as an other financing source in the governmental fund receiving the proceeds. Payment of principal and interest is an expenditure recorded in the debt service fund. All bond transactions and balances for business-type activities are reported in proprietary funds. FUND BALANCE/NET POSITION Fund balance is the difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources on the governmental fund statements. Net position is the difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources on the government-wide, proprietary and fiduciary fund statements. When both restricted and unrestricted resources are available for use, it is the university s policy to use unrestricted resources first, then restricted when they are needed. When only unrestricted resources are available for use, it is the university s policy to use committed resources first, then assigned resources and unassigned resources last. 14

27 Fund Balance Components Fund balances for governmental funds are classified as nonspendable, restricted, committed, assigned or unassigned in the fund financial statements. Nonspendable fund balance includes amounts not available to be spent because they are either: o Not in spendable form o Legally or contractually required to be maintained intact. Restricted fund balance includes those resources that have constraints placed on their use through external parties such as creditors, grantors, contributors, laws or regulations of other governments or by law through constitutional provisions or enabling legislation. Committed fund balance can be used only for specific purposes pursuant to constraints imposed through legislation passed into law by a formal action of the Texas Legislature, the state s highest level of decision making authority. Assigned fund balance includes amounts constrained by the state s intent to be used for specific purposes, but the constraints do not meet the requirements to be reported as restricted or committed. Intent is expressed by either: o The Texas Legislature o A body (for example, a budget or finance committee) or official to which the governing body has delegated the authority to assign amounts to be used for specific purposes. Unassigned fund balance is the residual classification for the general fund. This classification represents fund balance that was not assigned to other funds and was not restricted, committed or assigned to specific purposes within the general fund. Net Investment in Capital Assets Net investment in capital assets, consists of capital assets, net of accumulated depreciation and reduced by outstanding balances for bond, notes, and other debt that are attributed to the acquisition, construction or improvement of those assets. Restricted Net Position Restricted net position results when constraints placed on net resources use are either externally imposed by creditors, grantors, contributors, and the like or imposed by law through constitutional provisions or enabling legislation. Unrestricted Net Position Unrestricted net position consist of net resources that do not meet the definition of the two preceding categories. Unrestricted net position often has constraints on resources that are imposed by management but can be removed or modified. 15

28 INTERFUND ACTIVITIES AND TRANSACTIONS Lamar University has the following types of transactions between funds: (1) Transfers: Legally required transfers that are reported when incurred as Transfers In by the recipient fund and as Transfers Out by the disbursing fund. (2) Reimbursements: Reimbursements are repayments from funds responsible for expenditures or expenses to funds that made the actual payment. Reimbursements of expenditures made by one fund for another that are recorded as expenditures in the reimbursing fund and as a reduction of expenditures in the reimbursed fund. Reimbursements are not displayed in the financial statements. (3) Interfund receivables and payables: Interfund loans are reported as interfund receivables and payables. If repayment is due during the current year or soon thereafter, the balance is classified as current. Balances for repayment due in two (or more) years are classified as noncurrent. (4) Interfund Sales and Purchases: Charges or collections for services rendered by one fund to another that are recorded as revenues of the recipient fund (interfund services provided) and expenditures or expenses of the disbursing fund (interfund services used). The composition of Lamar University s interfund activities and transactions are presented in Note

29 NOTE 2: Capital Assets Revenue Received from the sale of surplus property has been transferred to unappropriated general revenue in accordance with HB7, Sec. 20. A summary of changes in Capital Assets for the year ended August 31, 2016 is presented below: PRIMARY GOVERNMENT Balance Completed Transfers Balance 09/01/15 Adjustments CIP Inc/(Decrease) Additions Deletions 08/31/16 BUSINESS-TYPE ACTIVITIES Non-Depreciable Assets Land and Land Improvements 11,449, , ,583, Library books/leaseholds Construction in Progress 13,831, (603,513.14) 15,454, ,682, Other Assets 2,150, , ,304, Total Non-Depreciable Assets 27,431, (603,513.14) - 15,741, ,570, Depreciable Assets Buildings and Building Improvements 254,831, , (3,325,104.94) 251,680, Infrastructure 17,106, ,106, Facilities & Other Improvements 22,923, , ,352, Furniture and Equipment 23,434, , ,061, (803,515.08) 24,698, Vehicle, Boats & Aircraft 1,331, , , (12,995.00) 1,666, Library books/leaseholds 22,785, , (3,423.42) 22,809, Total Depreciable Assets at 342,413, , , , ,397, (4,145,038.44) 341,313, Less Accumulated Depreciatio Buildings and Improvements (128,111,869.95) (5,010,709.67) 2,875, (130,246,743.24) Infrastructure (12,298,599.79) (404,933.40) - (12,703,533.19) Facilities & Other Improveme (12,005,617.85) (597,264.60) - (12,602,882.45) Furniture and Equipment (17,412,653.22) (98.58) - - (1,937,461.50) 802, (18,547,999.83) Vehicles, Boats & Aircraft (1,005,181.28) - - (38,079.00) (144,121.51) 12, (1,174,386.79) Library books/leaseholds (20,115,126.32) (446,988.03) 3, (20,558,690.93) Total Accumulated Depreciation Depreciable Assets, Net Business Type-Activities (190,949,048.41) (98.58) - (38,079.00) (8,541,478.71) 3,694, (195,834,236.43) 151,464, , , (6,144,048.96) (450,570.17) 145,479, ,896, , ,597, (450,570.17) 188,049,

30 NOTE 3: Deposits, Investments, and Repurchase Agreements Lamar University is authorized to invest in obligations and instruments as defined in the Public Funds Investment Act (Sec Texas Government Code). Endowment Funds may be invested in accordance with the Uniform Management of Institutional Funds Act, Property Code Chapter 163. Such investments include (1) obligations of the United States or its agencies, (2) direct obligations of the State of Texas or its agencies, (3) obligations of political subdivisions rated not less than A by a national investment rating firm, (4) certificates of deposit, and (5) other instruments and obligations authorized by statute. Lamar University is authorized by statute to make investments following the prudent person rule. There were no significant violations of legal provisions during the period. Deposits As of 08/31/16, the actual bank balance was $27,682, The carrying balance was $37,363, as presented below. Governmental and Business-Type Activities CASH IN BANK - CARRYING VALUE $37,363, Less: Certificates of Deposit included in carrying value and reported as Cash Equivalent Less: Uninvested Securities Lending Cash Collateral included in carrying value and reported as Securities Lending Collateral Less: Securities Lending CD Collateral included in carrying value and reported as Securities Lending Collateral Cash in Bank per AFR $37,363, Governmental Funds Current Assets Cash in Bank Governmental Funds Current Assets Restricted Cash in Bank Governmental Funds Non-Current Assets Restricted Cash in Bank Proprietary Funds Current Assets Cash in Bank $22,685, Proprietary Funds Current Assets Restricted Cash in Bank 5,426, Proprietary Funds Non-Current Restricted Cash in Bank 9,251, Cash in Bank per AFR $37,363, These amounts consist of all cash in local banks and a portion of short-term investments. These amounts are included on the combined statement of net position as part of the cash and cash equivalents and securities lending collateral accounts. 18

31 Investments As of August 31, 2016, the fair value of investments were: Governmental and Business-Type Activities US Government Fair Value US Treasury Securities US Treasury Strips US Treasury TIPs US Government Agency Obligations (Ginnie, Fannie) US Government Agency Obligations (Texas Trea. Safekeeping) Corporate Obligations Corporate Asset and Mortgage Backed Sec. Domestic Equity $ 1,496, International Obligations (Govt and Corp) International Equity Repurchase Agreement Repurchase Agreement (Texas Trea. Safekeeping) Fixed Income Money Market Bond Mutual Fund $ 35,020, Other Commingled Fund $ 13,897, International Other Commingled Fund Subtotal Long-Term Investments (Statement of Net Assets) $ 50,415, Other Commingled funds (Texpool and Federated Prime Money Market) $ 23,586, Commercial Paper Subtotal Cash Equivalents (Statement of Net Assets) $ 23,586, Total $ 74,001,

32 Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The university's investment policy requires that investments in debt securities be rated in the top three investment grade ratings (Standard & Poor's AAA to A or comparable ratings with other agencies for operating funds and BBB and above for endowments) at the time of purchase. Two nationally recognized statistical rating organizations must rate the security. Risk is further limited through the Investment Policy by term limitations, and maximum single purchase and maximum aggregate position percentages. As of August 31, 2016, the university s credit quality distribution for securities with credit risk exposure was: Fund Type GAAP Fund Money Market Fund Fair Market S&P Rating Texpool $ 23,540, AAAm Fed. Income $ 46, AAAm $ 23,586, Fund Type GAAP Fund Bond Mutual Fund Fair Market S&P Rating % DFA 1 Year fixed income $ 9,428, AAA 47% $ 2,511, AA+ 13% $ 4,218, AA 21% $ 3,213, AA- 16% $ 525, A+ 3% $ 160, A-1+ 1% DFA Short Term Gov. $ 1,997, AAA 100% Vanguard Short Term Federal $ 9,400, AA+ 94% $ 600, NR 6% Vanguard Long Term Treasury $ 976, AA+ 97% $ 30, NR 3% $ 33,061,

33 NOTE 4: Short Term Debt Lamar University has no short term debt as of August 31, NOTE 5: Long Term Liabilities Changes in Long-term Liabilities During the year ended August 31, 2016, the following changes occurred in long-term liabilities: Business Type Balance Balance Due Within Activities 09/01/15 Additions Reductions 08/31/16 One Year Deposit Payable $ 232, $ 406, $ 172, $ 466, $ 154, Employees' Compensable Leave 3,490, ,766, ,878, ,378, $ 506, Total Long-Term Liabilities $3,722, $3,172, $3,050, $3,844, $ 661, Employees Compensable Leave See Note 1 for discussion of Employees Compensable Leave. Bonds Payable See Note 6 for a discussion of Bonds Payable. 21

34 NOTE 6: Bonded Indebtedness All bonded indebtedness for Lamar University is issued by System Administration through the Texas State University System Revenue Financing System. System Administration and each component institution within the system are members of the Revenue Financing System. The Board of Regents pledged all of the funds (revenues) and balances derived or attributable to any member of the Revenue Financing System that are lawfully available to the Board for payments on Parity Debt. System Administration issued the debt; therefore, the bonds payable attributable to the institution are included with the Bonds Payable reported by System Administration. The institution must repay the debt that was issued on its behalf; consequently, the following debt amortization schedule is presented for informational purposes only. DEBT SERVICE REQUIREMENTS ATTRIBUTABLE TO LAMAR UNIVERSITY Description Year Principal Interest Total All Series 2017 $7,037, $4,269, $11,306, ,222, ,995, ,218, ,971, ,700, ,672, ,407, ,814, ,221, ,900, ,911, ,811, ,335, , ,265, Totals $98,873, $32,622, $131,495, A portion of the debt represents Tuition Revenue Bonds historically funded by the Texas Legislature through General Revenue Appropriations. The institution was appropriated $2,457,631 during the current fiscal year for Tuition Revenue Bond debt service. The institution expects future Legislative appropriations to meet debt service requirements for Tuition Revenue Bonds. 22

35 NOTE 7: Derivative Instruments Lamar University has no derivative instruments as of August 31, NOTE 8: Leases Operating Leases Included in the expenditures reported in the financial statements are the following amounts of rent paid or due under operating lease obligations: Fund Type Amount General Fund 917, Future minimum lease rental payments under non-cancellable operating leases having an initial term in excess of one year are as follows: Fiscal Year Ended August ,122, ,113, ,103, , , , Total Minimum Future Lease Rental Payments $4,438, Capital Leases Lamar University has no capital leases as of August 31, NOTE 9: Pension Plans The state established an optional retirement program for institutions of higher education. Participation in ORP is in lieu of participation in the Teacher Retirement System and is available to certain eligible employees. The contributions made by plan members and employers for the fiscal year ended 08/31/16 are: Year Ended August 31, 2016 Member Contributions $ 2,163, Employer Contributions 2,381, Total $ 4,544,

36 NOTE 10: Deferred Compensation State employees may elect to defer a portion of their earnings for income tax and investment purposes pursuant to authority granted in the TEX. GOV T. CODE ANN., Sec Two plans are available for employees participation. Both plans are administered by the Employees Retirement System. The State also administers another plan: TexaSaver created in accordance with Internal Revenue Code Sec. 401 (k). The assets of this plan do not belong to the State. The State has no liability related to this plan. NOTE 11: Post Employment Health Care and Life Insurance Benefits- Not Applicable NOTE 12: Interfund Activity and Transactions As explained in Note 1 on Interfund Activity and Transactions are numerous transactions between funds and agencies. At year end amounts to be received or paid are reported as: Interfund Receivables or Interfund Payables Due From Other Agencies or Due to Other Agencies Due From Other Funds or Due to Other Funds Transfers In or Transfers Out Legislative Transfers In or Legislative Transfers Out Lamar University experienced routine transfers with other state agencies that were consistent with the activities of the fund making the transfer. Repayment of interfund balances will occur within one year from the date of the financial statement. 24

37 Individual balances and activity as of August 31, 2016, follows: Interfund Receivables and Payables - Current Current Portion Due From Due To Purpose Designated Funds 9,701, Interfund Loan Auxiliary Funds 5,800, Interfund Loan Loan Funds 3,500, Interfund Loan Unexpended Plant Fund 400, Interfund Loan Endowment Funds 1, Interfund Loan Total Due From/To Other Funds 9,701, ,701, Due From Other Agencies Due To Other Agencies Source Agency 789, D23, Fund , Local Funds Agency 608, D23, Fund General Revenue Agency 305, D23, Fund , Local Funds Agency 530, D23, Fund , Local Funds Agency 730, D23, Fund , Local Funds Agency 789, D23, Fund ,056, Local Funds Agency 556, D23, Fund , Local Funds Agency 712, D23, Fund , General Revenue Agency 721, D23, Fund , General Revenue Agency 758, D23, Fund , Loan Funds Agency 758, D23, Fund ,235, Endowment Funds Agency 788, D23, Fund , Endowment Funds Total Due From/To Other Agencies (Exh A) 1,939, ,511, Legislative TRANSFERS IN Legislative TRANSFERS OUT Source Agency 758, D23, Fund ,457, General Revenue, TRB Agency 403, D23, Fund , GR-Hazlewood Total Legislative Transfers 256, ,457, TRANSFERS IN TRANSFERS OUT SOURCE Agency 902, D23, Fund , General Revenue Agency 347, D23, Fund , General Revenue Agency 758, D23, Fund ,472, Designated Funds Agency 758, D23, Fund , Designated Funds Agency 758, D23, Fund ,675, Auxiliary Funds Total Transfers 194, ,263,

38 NOTE 13: Continuance Subject to Review Lamar University is not subject to a review of continuance. NOTE 14: Adjustments to Fund Balances/Net Assets Lamar University has adjustments to the beginning Fund Balances and Net Assets in the amount of $5, due to adjustments in capital assets. NOTE 15: Contingent Liabilities As of August 31, 2016, various lawsuits and claims involving Lamar University were pending. While the ultimate liability with respect to litigation and other claims asserted against the University or the Board of Regents cannot be reasonably estimated at this time, such liability, to the extent not provided for by insurance or otherwise, is not likely to have a material effect on the University. During the fiscal year August 31, 2016, there were two (2) lawsuits and claims involving Lamar University. At August 31, 2016, two (2) lawsuits and claims involving Lamar University were pending. NOTE 16: Subsequent Events Subsequent to August 31, 2016, one of the two lawsuits involving Lamar University was settled and dismissed. NOTE 17: Risk Management Lamar University is exposed to a variety of civil claims resulting from the performance of its duties. It is university policy to periodically assess the proper combination of commercial insurance and retention of risk to cover losses to which it may be exposed. The University assumes substantially all risks associated with tort and liability claims due to the performance of its duties. Currently there is no purchase of commercial insurance, nor is the University involved in any risk pool with other government entities for these risks. Lamar University incurred no losses during the fiscal year ended August 31, 2016 and no claims were pending at that date. The University is required by certain bond covenants and FEMA to carry Fire and Extended Coverage and Boiler insurance on buildings financed through the issuance of 26

39 bonds using pledged Auxiliary Enterprise or other non-educational and General Funds. The insurance protects the bond holders from a disruption to the revenue stream that is being utilized to make the bond interest and principal payments and the federal government for storm damage. The Texas Motor Vehicle Safety Responsibility Act requires that every nongovernmental vehicle operated on a state highway be insured for minimum liability in the amount of $20,000/$40,000 bodily injury and $15,000 property damage. However, the University has chosen to carry liability insurance on its licensed vehicles in the amount of $1,000,000 combined single liability. The coverage exceeds the extent of the waivers of state immunity specified in the tort claims act. NOTE 18: Management Discussion and Analysis Management Discussion and Analysis is a required part of the basic financial statements. Management Discussion and Analysis is omitted because Lamar University is reported in a consolidated format with Texas State University System which is reported as a component of the State of Texas. Management Discussion and Analysis as it relates to Texas State University System can be found in the State of Texas basic financial statements. NOTE 19: The Financial Reporting Entity The Lamar University Foundation is a nonprofit organization with the sole purpose of supporting educational activities of Lamar University. The Foundation solicits donations and acts as a coordinator of gifts made by other parties. The Foundation remitted restricted gifts of $2,924, to the University during the year ended August 31, During the fiscal year the University furnished certain services, such as office space and Utilities, to the Foundation, for which the Foundation was billed at cost, $238, Accounts receivables of $701, are due from the Foundation at August 31, NOTE 20: Stewardship, Compliance and Accountability Not used NOTE 21: N/A- Not Applicable to the Reporting Requirement Process 27

40 NOTE 22: Donor-Restricted Endowments The net appreciation (cummulave and unexpended) on donor-restricted endowments presented below is available for authorization and expenditure by Lamar University. The University s spending policy for endowments reflects an objective to distribute as much of the total return as is consistent with overall investment objectives while protecting the real value of the endowment corpus. Donor-Restricted Endowments (In Thousands) Donor-Restricted Endowment Amounts of Net Appreciation Reported in Net Position True Endowments $ 18,697, Restricted for Nonexpendable Term Endowments 0.00 Restricted for Nonexpendable True Endowments 3,130, Restricted for Expendable Total Restricted Endowments $21,827, The University endowment investment income spending policy is a percent return on fair market value at August 31 st of each year for the next year. The authorization for the fiscal year ended August 31, 2016 was 4%. The balances, or transactions, of funds held in trust by others on behalf of Lamar University are not reflected in the financial statements. At August 31, 2016, there was one such fund for the benefit of the University. Based upon the most recent available information, the assets of this fund as reported by the Trustees are valued at $5,646, NOTE 23: Special or Extraordinary Items Not Used NOTE 24: Disaggregation of Receivable and Payable Balances Current Receivables and Other Current Liabilities as of August 31, 2016 are comprised of the following: Federal Receivables Instruction $ 132, Research 42, Public Service 46, Academic Support 12, Scholarship 288, Loans 615,

41 Institutional Support 0.00 Construction 1,036, TOTAL FEDERAL RECEIVABLES $ 2,174, Other Receivables Auxiliary Enterprises Loan Pledges Receivables (Restricted) Endowment and Similar Funds TOTAL OTHER RECEIVABLES Other Payable TOTAL OTHER PAYABLES $ 0.00 NOTE 25: Termination Benefits Lamar University has no termination benefits to report as of August 31, NOTE 26: Segment Information Lamar University has no segments to report as of August 31, NOTE 27: Service Concession Arrangements Lamar University has no service concession arrangements to report as of August 31, NOTE 28: Deferred Outflows of Resources and Deferred Inflows of Resources Lamar University has no deferred outflows or inflows of resources to report as of August 31, NOTE 29: Trouble Debt Restructuring Lamar University has no trouble debt restructuring to report as of August 31, NOTE 30: Non-Exchange Financial Guarantees Lamar University has no non-exchange financial guarantees to report as of August 31,

42 Supplemental Support Information Supplemental Support Information The Center for Applications of Digital Technologies in Health and Disability CADT will develop digital products and applications for healthcare providers and caregivers as well as the patient and their families. The center is designed to be self-sustaining within 4 years, helping to bridge gaps in current healthcare service. The establishment of CADT will create a focused niche for research (developing new evidence-based procedures), teaching (through student involvement in research) and service (product development that brings measurable positive health outcomes).

43 Supplemental Support Information The Flare and Abnormal Situation Management Research for Petroleum and Chemical Process Industries The objective of this visionary initiative is to develop novel, cost-effective flaring-minimization and emissionreduction technologies and software with commercial applications. It will assist in addressing energy losses during flaring emissions in abnormal situations that cause economic, material and environmental harm. The project will focus on the development of new strategies and technologies explore cost-effective solutions for petroleum and chemical process industries explore flare operation modeling and optimization study abnormal situation management commercialize the technological achievements Relatedly, researchers also will examine the integrity and security of regional infrastructure that can be compromised due to cybersecurity threats and the destructive effects of extreme environmental changes, such as tropical storms and weather hazards. This project will enhance graduate and undergrad research and education within engineering, computer science and chemistry. A second emphasis of this initiative is the Southeast Texas Center for Cyber-Physical Security and Resilient Infrastructure Research. The center will concentrate on three primary areas of study: cyber-physical and cybersecurity research, materials reliability research and coordination of response in time of catastrophic failure. Supplemental Support Information